Brief Fact Summary. Davis (D) contends that for his oppressive conduct toward the minority shareholder Sheerin (P), the trial court erred in mandating a forced buy-out of Sheerin’s (P) shares.
Synopsis of Rule of Law. Courts have the option of using forced buy-outs as remedies for oppressive conduct of majority shareholders.
The court stated that Texas courts, under their general equity power, may decree a buy-out in an appropriate case where less harsh remedies are inadequate to protect the rights of the parties.
View Full Point of LawIssue. Are buy-out remedies appropriate in cases of oppressive conduct by majority shareholders?
Held. (Dunn, J.) Yes. Courts have the option of using forced buy-outs as remedies for oppressive conduct of majority shareholders. Davis (D) used his position to block Sheerin (P) from access to the corporate books making himself liable for the dissolution of the corporation. The forced buy out was appropriate. Oppression is grounds for the remedy of buy-out. Affirmed.
Discussion. The court tried to determine if weaker remedies would have sufficiently helped Sheerin (P) recovered. Forced buy-outs are drastic remedies that affect basic corporate structure. The court determined that the damages from the oppression were high enough for the buy-out. The key was in reasoning that oppressive conduct would continue in the future and damages would not be limited to just past acts of oppression. Forcing the buy-out prevents future harm.